"Icap is an innovative company and we have made a series of significant investments during the past 10 years, which have successfully expanded and diversified our business. However, while a number of our cash equities businesses are performing well, the expansion into full service agency cash equities in Europe and Asia has failed to match up to our expectations," Spencer said.

As well as affecting 114 employees in Europe and Asia, the move will also cost ICAP £51m. City experts said the decision showed that Spencer was again taking a firm hand at the company which he founded in 1986. The multi-millionaire reportedly admitted last month that his role as Conservative party treasurer had distracted him from affairs at Icap. He will leave the role this autumn.

Icap also revealed that the soon-to-be-discontinued venture had run up a loss of £25m in the last 12 months. That is about £7m more than analysts expected.

"Today's news may further result in the market questioning the future of ICAP's, historically successful, acquisition strategy," said Vivek Raja of Panmure Gordon in a research note.

ICAP plans to keep running an execution-only cash equities arm in London, which does not have to carry the cost of producing research.

Back in 2008, Icap spotted a lucrative opportunity in the stockbroking arena after the collapse of Lehmans. But the division did not hit its targets, partly due to a sharp fall in overall trading volumes. Collins Stewart, the UK stockbroker, said last week that its volumes were at almost half the level enjoyed before the banking sector went into near-meltdown.

Analysts at Merrill Lynch said that Icap's attempt to innovate its business model was "strategically correct". "An optimist would say that the cash equities experience has underlined the need for iron discipline in these undertakings," they said.